The Fundamentals of Asset Division in Divorce Cases
One of the biggest issues involved with any Arizona divorce is the division of a couple’s assets. This process involves correctly identifying what those assets actually are, determining which assets are considered to be community property or separate property, valuing all community assets, and finally dividing all community assets equally. Because this is a sensitive topic and can quickly become quite complex, it is often advisable to work with an attorney as you divide your assets. Here’s a closer look at what is involved with the process, from start to finish:
Identifying Your Assets
In order to properly divide up your assets, all parties must be aware of what assets are currently being held. To get the most accurate information, Schill Law Group typically requests that their clients provide an inventory of all assets, including real estate holdings, vehicles, businesses, household goods with substantial value, and retirement and/or investment accounts. Tax returns are another great source of information for this process. Arizona law requires both parties involved in a divorce to disclose their assets and financial holdings. In the event that your ex does not willingly disclose this information, your lawyer may need to subpoena the other party so that all assets can be properly identified. It’s important to remember that debts are treated in the same manner as assets and should, therefore, be included in this process.
Categorizing Your Assets
Once all assets have been documented, it’s time to determine whether they are categorized as community property or as sole and separate property. Only items classified as community property can be divisible in an Arizona divorce. Generally, community property will include all assets required by either spouse throughout the duration of the marriage. Sole and separate property covers any assets that were brought into the marriage by one spouse or any assets that were gifted to only one spouse during the marriage. Categorizing your assets can become confusing and complicated when mixed assets are involved. For example, a spouse may have brought a 401(k) retirement account into the marriage but the account continued to grow throughout the marriage. While the pre-marriage balance is considered to be sole and separate property, anything accrued throughout the marriage is considered to be community property.
Valuing the Community Assets
After you have determined which assets are classed as community property, you are ready to value these assets. While bank and financial accounts can be valued via statements, other items like real estate, businesses, jewelry, or fine art may need to be appraised.
Dividing the Community Assets
The final step is the actual division of community assets. In some cases, both parties are able to work with their attorneys and mediators in order to come to an agreement concerning how the property will be divided. In others, a judge will need to make the final determination. Either way, Arizona law requires that community property be divided “equitably,” meaning that the division should be substantially equal. It should be noted, however, that a judge also has the discretion to make determinations about the true equitableness of each case. In addition to this, a judge may rule on an unequal division of assets to an “innocent” spouse in scenarios where a “guilty” spouse tries to hide or conceal assets.